Government-led M&A In Iron And Steel Industry

The iron and steel industry is one of the pillar industries of China’s economy.However,due to the economic downturn,iron and steel industry in China has been badly hit.Under the circumstances of the declining industry growth and low market concentration,excess production capacity and high competition pressure have brought more problems and challenges to the iron and steel industry,which is consequently in urgent need of internal integration.Since 2005,most of major M&A in domestic iron and steel industry are led by governments.The government plays an important role in advocating regional and cross-regional M&A.But the interventions of governments in M&A of the iron and steel industry are also accompanied with emergence of adverse effects.Some of the mergers and acquisitions moved slowly,others fail in integration in the end,while some of companies still operate separately after the M&A.Therefore,this paper takes Shandong Iron and Steel Group as an example and concentrates on analyzing the following 3 questions: 1.What are the reasons and motivations of the government-led corporate restructuring in iron and steel industry;2 Is government-led M&A in iron and steel industry beneficial to value creation of the company;3.What problems exist during the process of government-led mergers and acquisitions and how to resolve the problems and create more valuable government-led M&A in the future.